Peru vote opens new front in US-China rivalry

PERU

Run-off extends political drift in a major copper producer as Washington moves to counter Beijing’s mining footprint

PERU has been forced into a presidential run-off after a fragmented vote – extending uncertainty in one of the world’s most important copper producers at a moment when Washington and Beijing are competing for influence across Latin America.

The first round of Peru’s presidential election has confirmed what many had expected: a fractured political landscape, no clear governing mandate and a prolonged period of uncertainty in a country central to both global supply chains and intensifying geopolitical competition.

With Keiko Fujimori and Rafael López Aliaga heading for a second round on 7 June after securing roughly 17 per cent and 15 per cent respectively, the result underscores the absence of any dominant political force.

No candidate came close to the 50 per cent threshold required to win outright, reflecting deep voter disenchantment and a system that continues to produce divided outcomes.

That fragmentation is now set to carry into government.

Peru’s return to a bicameral legislature – with a Senate and Chamber of Deputies replacing the previous unicameral Congress – is unlikely to simplify the political picture. Instead, it is expected to produce a legislature split across multiple parties, none with anything approaching a working majority.

For Inigo Camilleri de Castanedo, Sibylline’s Latin America analyst, that institutional reality is central to understanding Peru’s persistent instability.

“Congress is going to be extremely fractured – and that tells you a lot about how Peru works,” he says.

The consequences are practical as much as political. Legislative gridlock has repeatedly stalled reforms across key sectors, from security policy to mining regulation, while competing factions block one another or protect entrenched interests. As a result, the first round of the election is unlikely to change much on the ground.

“The impact of the first round is limited – it’s really just filtering candidates,” he adds. “The real pressure comes in the run-off.”

There were early signs of strain. Material shortages forced more than 200 polling stations, most in Lima, to extend voting into the following day.

While EU observers reported no evidence of irregularities and attributed the disruption to logistical issues, the delays fed into broader voter frustration with a political system already shaped by instability, inefficiency and corruption.

For now, large-scale unrest remains unlikely. Previous waves of protest have struggled to sustain momentum, particularly when elections offer a near-term outlet for public anger. But that relative calm is fragile, and analysts warn it could shift quickly if confidence in the electoral process begins to erode.

Beneath the political noise, however, lie deeper structural risks – many of which converge in Peru’s mining sector.

The country is one of the world’s largest producers of copper, while gold remains its single largest export, underlining its importance to global supply chains.

Stability in Peru’s mining sector matters not just for investors, but for governments seeking to secure supply chains in an increasingly competitive global environment.

Yet that sector is shaped by a complex and often unstable domestic landscape.

A large informal economy continues to operate alongside formal mining, particularly in rural regions where extraction is a primary source of income. Efforts to formalise these activities have struggled, most notably through the REINFO registry, which was intended as a temporary mechanism but has instead become a long-term fixture.

“REINFO was meant to formalise the sector, but instead it’s allowed people to keep operating in grey areas,” he says.

Despite the scale of the issue, illegal and informal mining have received limited attention in the campaign, underlining the gap between political rhetoric and the realities shaping one of Peru’s most important industries.

The consequences extend beyond regulation. Informal and illegal mining have become increasingly intertwined with organised crime, contributing to rising insecurity in key regions. In some cases, criminal groups have targeted major mining operations, carrying out kidnappings, theft and violence against workers. At the same time, corruption and limited state capacity have weakened enforcement efforts.

“Illegal mining is a huge part of the security problem now,” he adds.

That deterioration has been gradual but significant. Authorities failed to address emerging threats over several years, allowing small-scale criminal activity to expand into a broader and more entrenched problem.

Peru is also estimated to account for around 5 per cent of global cocaine production, reinforcing why narcotics remain a central concern for both domestic authorities and external partners – and offering a ready-made justification for deeper US engagement.

“They didn’t pay attention to security for years – and now it’s grown into a much bigger issue,” he says.

Both leading candidates have campaigned on tougher approaches to crime, including expanding the role of the security forces and increasing co-ordination between police and military units. While such measures may improve short-term enforcement, they also carry risks, particularly in regions where criminal networks are already embedded in local economies.

Overlaying these domestic challenges is a shifting geopolitical landscape.

China has built a significant presence in Peru’s mining sector, financing and operating major projects while absorbing a large share of the country’s exports. Its influence now extends to infrastructure, most visibly through the Chinese-backed Chancay port north of Lima, which is emerging as a major Pacific trade hub and a symbol of Beijing’s growing footprint in the region.

The US, by contrast, is seeking to reassert influence after years of relative disengagement. That effort is likely to play out less through direct competition over mining assets in the short term, and more through security and institutional engagement.

In the near term, Washington is likely to prioritise co-operation on organised crime, narcotics and internal security, both as a policy objective and as a way of building influence. Only later would that translate into broader economic and strategic gains.

The run-off will determine who takes office. But it is unlikely, on its own, to resolve the deeper issues that continue to define Peru’s political and economic trajectory.

Camilleri de Castanedo says Washington’s most immediate route in is likely to be security.

“If the US helps Peru deal with security, that opens the door to everything else.”

Stay ahead of emerging risk. Get notified whenever Sibylline publishes a new report.